Dairy farming is an agricultural practice that produces milk at a large scale for human consumption. Dairy business involves dairy farming to collect, process, and distribute milk. It is among common people for daily consumption.
Opening a dairy farm or expanding an existing farm requires a large chunk of money. It is where the concept of dairy business finance comes into the picture. A dairy business loan offers an amount of money availed by farmers, individuals, firms and business owners. It is to finance their dairy businesses.
A dairy business loan can be used for several purposes like farm construction, milking machines, dairy items, farm equipment, chaff cutter and more. On that note, let’s look at a few things that can help you approach the dairy business loan easily!
1. Purpose of Dairy Business Loan
You should check out the purpose of availing the loan. A daily business loan is generally availed of to fulfil the following needs.
- To purchase plant and machinery related to the production of milk.
- To establish a new dairy farm unit or expand an already established one.
- To construct, expand or renovate cattle sheds.
- To establish dairy marketing outlets.
- To purchase farm equipment, chaff cutter, etc.
- To buy raw materials to grow fodder for cattle and meet other capital needs.
- To meet expenses related to dairy product processing, storage, packaging, warehousing, etc.
- To take care of rearing and crossbreeding of cattle.
- To meet transportation costs of dairy manufactured goods.
- To invest in cold storage facilities and marketing services.
2. Dairy Business Plan
To get a dairy business loan, you should have a proper dairy business plan to execute once you start with dairy farming. A good dairy business plan helps in procuring a good loan deal. Below are the few guidelines of a good dairy business plan:
- Developing a business plan with the consultation of experts/professionals in the dairy sector
- Performing thorough business research to avoid any loopholes in the plan
- Planning for an adequate infrastructure to take care of animals and carry out the dairy farming activities
- Developing a systematic feeding and waste management program for optimum utilization of resources
- Obtaining licenses to start the dairy farming business
- Obtaining funds thorough research on the business loan providers in the financial sector
- Meeting the eligibility criteria to avail a dairy business loan of the desired amount.
3. Eligibility criteria to avail a Dairy Business Loan
You need to meet the general eligibility criteria to avail of a dairy business loan:
- You must be a resident self-employed individual engaged in dairy activities and serving a dairy sector.
- You must be between 25 years and 65 years of age.
- You must own a business with a minimum vintage of 3 years.
- You must have filed income tax returns for your business for a minimum of 1 year.
- You must have a clean credit history and a good CIBIL score.
4. Documents required for a Dairy Business Loan
- Identity proof – Identity cards like Aadhaar card, PAN card, Voter ID, etc.
- Address proof – Rent agreement, electricity bill, telephone bill, etc.
- Ownership proof – Depending on the business type, you need to submit a proprietorship document or ownership deeds of your company.
- Passport size photographs of the applicant
- Proof of business registration
5. Interest rates and other charges on Dairy Business Loan
The rate of interest on a dairy business loan depends on the amount and tenor of the loan. The loan amount is generally calculated as a major proportion of the total project cost. It has a flexible repayment capacity. Most money lenders do not charge any processing fee on this type of loan.
6. How to Apply for Dairy Business Loan
Several business loan providers offer it at attractive interest rates. It also comes with easy repayment options. All you need to do is visit the official website of the lender and easily apply online for this loan. Once you meet the eligibility criteria, a lender will process your application fast. In turn, it will also disburse the loan amount immediately to your bank account.
What are you waiting for? Go ahead, apply for the loan and make your dairy business flourish!
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